Companies count on CFOs not only to be experts on financial performance but also to have oversight in matters such as risk, compliance, HR, and IT. Combine an expanding role with the amount and pace of change in business, and it’s enough to make even the most informed, tech-savvy head spin.
Whether it’s for new business systems, performance management initiatives, governance, or other needs, a wider base of knowledge is needed for organisations to excel. So CFOs increasingly are looking for outside experts to fill key roles.
Sixty-one per cent of CFOs in a survey by staffing company Robert Half say they plan to bring in consultants in the next 12 months for business systems and performance improvement, up from 48% who planned to use consultants for those duties in 2013.
CFOs participating in the survey anticipate increased use of consultants for risk, governance, and compliance (50%, up from 40% in 2013); finance optimisation (49%, up from 36%), and taxation (45%, up from 42%). Projected use of consultants for finance and accounting fell slightly, to 55% from 57% in 2013.
Consulting business is on the rise globally at large accounting firms. The share of EY’s revenues from consulting has increased from 18.8% in 2011 to 25.4% in 2015. At KPMG, the change from 2010 to 2014 (KPMG has not yet reported numbers for the year ending September 30th) was 32% to 36.7%. PwC’s consulting business brought in 25.7% of revenues in 2011 and 31.6% in 2015. Deloitte’s consulting revenue as a percentage of overall revenue improved from 29.9% in 2011 to 34.7% in 2015.
Donna Carter, CPA, CGMA, a former CFO who now is a partner with CSuite Financial Partners, an executive services firm, cited several factors for the rise in the use of consultants.
First, awareness of cyber-security breaches has grown significantly. Second, the increased use of technology in the workplace means more demand for information. Businesses need help replacing legacy systems to provide better analytics. The growth of cloud-based applications and mobile devices, coupled with their inherent risks and compliance issues, requires the use of consultants with specific expertise. Also, businesses are still striving for efficiency, which means they must improve processes and controls.
Jim Blake, CPA, CGMA, the CFO of Morey’s Piers amusement parks in Wildwood, New Jersey, said consultants can be helpful when they supply expertise on rigorous and rapidly changing compliance and regulatory issues.
“When you have regulations coming at you left and right, and a limited staff, you have to get that expertise from outside,” Blake said.
He relies on an extensive network of professional contacts for such consulting. “They specialise in things that I don’t,” Blake said. “I’m not shy about getting help when I realise I have limitations.”
Organisations frequently turn to financial consultants, particularly at the pre- and post-implementation stages, for their subject matter expertise, Paul McDonald, senior executive director for Robert Half, said in a news release.
Take Jackie Davidson, CPA, CGMA. She was CFO of Market Leader Inc., until 2014. Major projects were one reason she brought in consultants. “I couldn’t expect that someone would handle M&A due diligence on top of their normal work,” she said.
Robert Half recommends that organisations emphasise communication about goals and expectations when employing consultants. The interim professional should understand the scope of the engagement, and full-time workers should be instructed about their role and how they should work with the consultant.
Building rapport with the consultant will help get the working relationship off to a good start. Blake said that having a previous association with a consultant also helps, because trust is already part of the relationship. He doesn’t have to spend time vetting the consultant or setting expectations.
Related CGMA Magazine content:
“How to Make a Splash in Consulting in Career’s Final Act”: Three-fourths of US CFOs in a survey consider the prospect of consulting when they approach retirement to be attractive. Read tips for successful consulting from a former CFO who has happily made the move.
—Neil Amato (firstname.lastname@example.org) is a CGMA Magazine senior editor.